Singapore's blood money
Hanging drug couriers but investing with their
suppliers
By Dennis Bernstein and Leslie Kean
FRIDAYS, just before dawn, are hanging days
in Singapore. Navarat Maykha, a Thai mother of two small children,
awaited her turn as she prayed in her jail cell with her attorney,
Peter Fernando, just a few days before her execution. An
impoverished and uneducated woman, and also deeply religious, she
swore until her death that she was unaware of the heroin that was
hidden in the lining of a suitcase given to her by a Nigerian
friend.
Singapore - a tiny island nation of 3 million perched at the
southern tip of the Asian continent - prides itself on its strict
drug laws, which include a mandatory death sentence for anyone
caught with as little as half an ounce of heroin.
"It's heartbreaking sometimes," said Fernando during a recent
interview from his office in Singapore. "If you are an addict, and
you are simply sitting at home with more than 15 grams of heroin
and you cannot prove with scientific accuracy that a portion of the
drugs are for personal use, you will hang."
The fiercely authoritarian government micro-manages all aspects
of the secretive hangings, as it does everything else in this
country. This efficiency allows for the possibility of multiple
executions when drug offenders swell the prison. On September 27,
1996, six people were hanged in one morning. Four had been hanged
the previous Friday, all for drug trafficking. According to
Amnesty
International, 1995 - the year Navarat was
executed - was a busy year at the gallows in Singapore, when more
than fifty people were hanged, the majority for drug offenses.
In its March 1997 International Narcotics Control Strategy
Report, the US State Department said that "the number of drug
traffickers hanged in Singapore increased dramatically in the last
two years." Amnesty International, also describing a "sharp
increase in the number of executions" in a 1997 report, states that
those executed are most often small-time addicts and couriers,
usually poorly educated and economically vulnerable, "while those
who organise and profit from the crimes frequently escape capture
and prosecution."
But that does not describe the worst of it. The Nation
has learned that the highest levels of the Singaporean government,
using the New York-based Morgan Guaranty Trust Company, a
subsidiary of J.P. Morgan, as a custodial operative, are engaging
in joint business ventures with one of the world's most notorious
drug lords and with the drug-backed military dictatorship of Burma
(Myanmar). This has been confirmed by corporate, government and
legal documents from four countries and was contended by
high-ranking US narcotics and government officials in private
interviews.
Dual-track policy
ACCORDING to interviews with Singaporean lawyers and US
narcotics officials, the heroin found in Singapore comes mostly
from Burma, one of the world's largest exporters of the highly
profitable drug, with 1996 exports estimated at $1 billion. Since
the State Law and Order Restoration Council (SLORC) takeover of
Burma in 1988, illicit drug exports have more than doubled; French
and US satellite surveys have shown an explosion of poppy-growing
in areas under the SLORC's direct control. In 1995 the Australian
Parliament heard testimony on SLORC protection of the narcotics
trade as a matter of policy, "in order to raise government
revenue." And a report last year by the US embassy in Rangoon,
based on the SLORC's economic data, concluded that exports of
opiates "appear to be worth about as much as all legal exports" and
that investments in infrastructure and hotels are coming from major
opiate-growing and opiate-exporting organisations [see Bernstein
and Kean, "People of the Opiate," December 16, 1996].
"Drug traffickers who once spent their days leading mule trains
down jungle tracks are now leading lights in Burma's new market
economy," said Secretary of State Madeleine Albright in a statement
this past July. "We are increasingly concerned that Burma's drug
traffickers, with official encouragement, are laundering their
profits through Burmese banks and companies - some of which are
joint ventures with foreign businesses," she said. It is with the
SLORC, and allied organizations, that Singapore's hang-'em-high
government is investing so heavily - in such ventures as hotels and
infrastructure.
This dual-track policy is condoned and encouraged at top levels
of the Singaporean regime, including by Lee Kuan Yew, the country's
undisputed strongman. Lee, whose antidrug policies are among the
strictest in the world, is participating in the country's deepening
business relationships with renowned heroin trafficker Lo Hsing Han
of Burma and his son and business partner, Steven Law. Their
operations in Burma, Singapore, Malaysia, Thailand and the United
States are now the focus of an ongoing U.S. government narcotics
and money-laundering investigation, The Nation has
learned.
Lo Hsing Han, a Kokang Chinese from the opium-producing region
of Burma's Golden Triangle, was convicted and sentenced to death in
1973 - not for drug trafficking, which had been carried out with
the tacit agreement of the state, but for treason. After being
released in a 1980 government amnesty, he returned to the Kokang
region. As of 1994, Lo controlled the most heavily armed
drug-trafficking organization in Southeast Asia. Today he rules
with godfather status over a clan of traffickers, and his
organisation controls a substantial amount of the world's opium
production, according to US narcotics officials. A memo from the
Thai government's Office of Narcotics Control Board states that
Lo's trafficking activities are augmented through his link to
Burma's military intelligence chief, Lieut Gen Khin Nyunt,
described as Lo's "supporter." It says that in 1993 Lo was granted
the "privilege from Lieut. Gen Khin Nyunt to smuggle heroin from
the Kokang Group to Tachilek [on the Thai border] without
interception."
Lo is chairman of Burma's Asia World Company Limited, managed by
his son Law, who has achieved unprecedented success under the
current dictatorship. "Law's power and connections are
unparalleled," comments one US official. "No other domestic
investor in Burma can get an audience with a cabinet member with
one phone call. When Law got married, eight cabinet members showed
up." Law's multimillion-dollar business ventures seem to win all
bidding wars in Burma's development race. (Law was denied a visa to
the United States last year. "We have information that leads us to
believe he is a trafficker in illicit substances," a US government
official told The Nation in explanation.)
Business is business
WALL Street Journal editors, in the 1997 Index of Economic
Freedom, rated Singapore as the most business-friendly country in
the world. Unfortunately, that friendliness has been extended to Lo
Hsing Han, Steven Law and the narco-dictatorship of Burma.
As Tay Thiam Peng, director of foreign operations at Singapore's
Trade Development Board, bluntly put it in 1996, when it comes to
business, morality takes a back seat to profits. "While the other
countries are ignoring Myanmar (Burma), it's a good time for us to
go in," Tay stated. "You get better deals, and you're more
appreciated... Singapore's position is not to judge them and take a
judgmental moral high ground." As Burma's number-one business
partner, Singapore now has 53 projects in Burma, which as of
January totaled nearly $1.2 billion.
"Since 1988...over half of [the investments from] Singapore have
been tied to the family of narco-trafficker Lo Hsing Han,'' says
Robert Gelbard, former US Assistant Secretary of State for the
Bureau of International Narcotics and Law Enforcement Affairs. Most
of these investments are in joint projects with Lo's
family-controlled Asia World Company. Asia World includes a host of
subsidiaries and three overseas branches in Singapore. US narcotics
officials say that these "overseas branches" are part of the
ongoing money-laundering investigation.
Asia World's 1996 company profile states that it began as a
trader in agricultural and animal feed products but today "has
emerged as one of Myanmar's (Burma's) fastest growing and most
diversified conglomerates." Burma's largest private-sector
enterprise, it has interests in trading, manufacturing, real
estate, industrial investment, development, construction,
transportation, imports and distribution. Asia World's operations
now include the running of a deep-water port in Rangoon, the bus
company Leo Express into northern Burma, and a $33 million toll
highway from Burma's poppy-growing region to the Chinese
border.
The combination of the Burmese military's ability to protect
shipments and production in the country and Asia World's ability to
move product over land and sea completes a perfect marriage of
convenience. In addition to these operations, US narcotics
officials say that Lo Hsing Han also runs a container business,
shipping cargo out of Rangoon from a nondescript container yard the
size of a city block. They suspect it of being a drug-shipping
operation. Although it is a subsidiary of Asia World, the
containerized cargo processing facility has no name, no sign and is
not mentioned in Asia World's business profile. According to one
official, some of the several hundred containers that have left
this yard have gone to Singapore and the United States.
In a June telephone interview from his headquarters in Rangoon,
Law denied all allegations of drug trafficking. He laughed and said
that Asia World operates under government regulations, "so if we do
anything against government policy, we cannot do our business," Law
said. "That's why concerning your point of any drugs in our city, I
can say we haven't [been] involved."
The money trail: the Myanmar Fund
THE Singapore government, in cooperation with Morgan Guaranty
Trust Company, is directly connected to key business ventures of
drug kingpin Lo through an investment group called the Myanmar
Fund. The fund, which provides investors "with long term capital
appreciation from direct or indirect investments in Myanmar
(Burma)," is registered as a tax-free fund in Jersey, Channel
Islands, according to documents provided to the Irish Stock
Exchange.
Singapore's largest government-controlled financial institution
- the Government of Singapore Investment
Corporation (GIC) - is listed in the documents
along with Morgan Guaranty Trust Bank (a J.P. Morgan subsidiary
separate from the Trust Company) as a core shareholder in the
Myanmar Fund. A September 1996 GIC business profile from the
Registry of Companies and Businesses in Singapore shows that
high-level
Singaporean politicians are officers and directors of the GIC,
including senior minister Lee Kuan Yew; his son, deputy prime
minister Brig Gen Lee Hsien Loong; and finance minister Dr Richard
Hu. As a core shareholder, the GIC helps determine how the fund's
money is invested in Burma. Jean Tan, a spokesperson for the
Singaporean embassy in Washington, confirmed in a June interview
that the GIC holds a 21.5 percent share of the Myanmar Fund. As of
last November, this investment was worth $10 million, according to
the Singaporean government.
The Myanmar Fund owns 25 percent of an Asia World subsidiary,
Asia World Industries. In fact, the Myanmar Fund's 1997
first-quarter report features two pictures of Asia World factories
on its cover. The Myanmar Fund has also heavily invested in a
number of luxury hotels in Burma, including Rangoon's Traders and
Shangri-La. The Asia World business profile describes the Traders
and Shangri-La hotels as major investment projects for Lo Hsing
Han's company. It says that the Shangri-La Hotel (and surrounding
apartments and offices) will be "the biggest of all" Asia World's
investments, with "$200 million...in appropriation of the
project."
In an official press release last November, the Singapore
government stated that its investments in the Myanmar Fund were
"completely open and above board" and that its investments in both
the two luxury hotels and Asia World were "straightforward
investments in bona fide commercial projects." However, the fund's
operations are hardly straightforward and open. The operations of
the GIC itself are effectively a state secret. The government
company is not required to file annual reports or report to
parliament. It has no public accountability, even though it uses
public moneys for its investments. Furthermore, according to fund
documents, in late 1994 - only weeks after being listed on the
Irish Stock Exchange - the GIC's shares disappeared from the stock
exchange register and were re-registered under the name of Ince
& Co. The Singaporean government acknowledged in November that
Morgan Guaranty Trust Company is the custodian for the GIC
securities, and that Ince & Co. was set up by Morgan to hold
the shares in its custody.
Morgan Guaranty Trust Bank, investing yet other funds on behalf
of clients, is the largest core shareholder (followed by the GIC)
of the Myanmar Fund at 42 percent, according to a fund report. This
means that together, the Singaporean regime's GIC and Morgan
Guaranty Trust Bank have been in control of 63 percent of the
Myanmar Fund and its co-investments with the corporation chaired by
drug baron Lo Hsing Han. (The GIC shares re-listed as Ince & Co
have shifted hands once again. In a February document obtained by
The Nation, the fund reported transfer of the Ince &
Co. shares to another company, Hare & Co. In telephone
interviews, spokesmen for the Myanmar Fund, the GIC and Morgan
Guaranty refused to provide information about the identity or
purpose of the new custodial company.)
Dining with the devil
SINGAPORE'S dealings with Lo Hsing Han and Steven Law continue
to expand unabated. Singapore's GIC investment in the Myanmar Fund
increased by 4.3 percent in 1996. In Rangoon, the Traders Hotel
celebrated its official opening last November. At the opening
ceremony, attended by Singapore's Ambassador and graced with an
ap-pearance by Lo himself, the presiding SLORC minister publicly
thanked both Steven Law and the government of Singapore for paving
the road for a smooth business partnership. "I would like to extend
my sincere gratitude to the government of Singapore," he said,
"without whose support and encouragement there would be very few
Singaporean businessmen in our country."
Since then, ground has been broken on the construction of
Sinmardev, a new, $207 million industrial park and port on the
outskirts of Rangoon. A Singaporean consortium is the leader in a
joint venture with the SLORC, the Myanmar Fund, Lo's family company
and a slew of international shareholders. The Myanmar Fund holds a
10 percent interest in Sinmardev. Singaporean entrepreneur Albert
Hong, head of Sinmardev, described the project as the largest
foreign investment in Burma outside the energy field.
"Singapore is more involved with Lo than any other country,
because that's basically where Steven Law is functioning out of
when he's not in Burma," observes a US narcotics official.
Singapore's rulers continue to deny any wrongdoing in connection
with their relationship to Asia World. "It is fairly far-fetched,
trying to link the Singaporean government and drug traffickers,"
said embassy spokesperson Jean Tan.
"Nonsense," says Singapore's former solicitor general Francis
Seow, now a research fellow at the East Asian
Legal Studies Program of Harvard Law School. The former close
associate of Lee Kuan Yew says he knows "through personal
experience" that Lee micro-manages every aspect of Singaporean
political, economic and social policy.
Dr Chee
Soon Juan, secretary general of the Singapore
Democratic Party and a leader of Singapore's political opposition,
was labeled a traitor for raising the drug issue in Singapore.
"Drug peddlers are routinely hanged in Singapore for carrying
heroin," wrote Chee, in a rare and courageous act of public protest
in response to a documentary that aired on Australian television
last year, Singapore Sling. "And where are all these drugs
coming from? Drug lords like Lo Hsing Han are the big-time pushers
aided by the SLORC generals." "Is this not hypocrisy at its worst?"
he asked.
"The Singapore government knows it's having dinner with the
devil, and sharing a very short spoon," says Seow. "And it is a
terrible double standard. Drug moneys are being laundered
apparently by the same drug lords who supply the heroin for which
small-time drug dealers are hanged. We are reaping profits as
Burma's biggest investor, but we're being paid with blood
money."
